Posted by Fintra , updated 2022-08-06
Multiple savings accounts? What's that all about? Well, let's break it down. Unlike your traditional bank account, having multiple saving accounts allows you to put aside money for different goals in your budget. While a traditional bank account has one purpose only — to pay your bills and manage money — having multiple types of savings accounts can help you reach your financial goals much quicker. It's not just about saving money either because these additional savings accounts also act as insurance policies against future disasters that may occur.
Some Benefits of Having Multiple Savings Bank Accounts
Having the right number of saving accounts, gives you the freedom to enjoy all the benefits and features they come with. Here are some of the benefits of having multiple savings accounts.
1. Benefits of Different Interest Rates
There are many benefits of having multiple savings accounts, but one of the biggest is that you can control the interest rate on your money. You can choose the rate and manage it so that it grows faster or slower than other accounts in your investment portfolio.
The reason this is an important benefit is that interest rates affect how much money you make over time. If you have a high-yield account, then it may take less time for your money to double or triple in value than if you had a low-yield account. This means that if you put more money into the high-yield account, then it will grow faster when compared to putting that same amount into a low-yield account. Doing this will allow you to enjoy the other benefits that your low-yield account offers while making money on your high-yield savings account.
2. Multiple Benefits and Options
Having multiple savings accounts is a good idea. Here are some benefits of having multiple savings accounts:
- Having more than one savings account gives you more options when deciding where to put your money. You can save more and invest in stocks, bonds, or other investments that have the potential to increase in value over time.
- It's easy to get carried away with just one account, so having several will help you stay on track with your goals and avoid the temptation to spend your money on unnecessary things.
- If something happens that affects your ability to make payments into one particular bank account (like an emergency loan), it's not a big deal – you can always move the money into another account at another bank or financial institution without any hassle or fees associated with transferring money between accounts at different institutions or banks.
3. Easy Tracking of Different Types of Transactions
As you get older, you might find that your budget has to change. Perhaps you're planning on having a baby and need to consider what that means for your finances. Or maybe you're thinking about buying a house and need to think about how much of your savings can be put toward that as opposed to other things in life.
Whatever the case may be, having multiple savings accounts can help you keep track of different types of transactions. For example, if you're trying to save money for a down payment on a house and want to put some away for the down payment goal but also want to put some aside for emergencies or other unexpected expenses, having multiple savings accounts can help you make sure that all your funds are accounted for in one place so that it's easy for you to monitor where they're going each month.
4. Cost Efficient for people with High ATM-Usage
While withdrawing money from an ATM sounds excellent, using a different bank's ATM is chargeable, and the number of free transactions in every month for a user has also reduced. In situations like this, having multiple savings accounts can help you save up some money on your withdrawals.
What You Should Know About Multiple Savings Accounts
The amount of accounts you may open is practically infinite. You can open more savings accounts than you'll ever need. With very few exceptions, most banks do not limit the number of accounts you may open. Opening accounts at many institutions might help you cover all of your bases. Many online bank offerdigital savings accountwith a high-interest rate where you do not need a minimum amount or charge a monthly service fee, allowing you to pick and select those that provide the perks that are most beneficial to you.
Is having multiple savings accounts a bad thing?
It's not a terrible idea to have multiple savings accounts if you're saving for different purposes and want to keep the cash separate. For example, you may establish one account for emergency savings and another for vacation funds. This might assist you to avoid withdrawing money that was intended for another purpose.
Why do individuals have many savings accounts?
You might create numerous savings accounts to assist you to meet various financial objectives. If you want to save for a down payment on a property while simultaneously starting a college fund, it may make sense to keep those assets separate. Because the money from several objectives will not be merged, this might make each of your goals easier to track.
Conclusion
Opening several accounts can be rewarding, but it can also be inconvenient. So make sure to handle your accounts well so you don't run into problems. If you change jobs, you might need to open a new salary account. So keep track of how many accounts (3-4 is a good number) you have and close the ones that aren't working anymore. Non-operational accounts can be a liability too—and if fraudsters find them, they'll probably try to take advantage of them by opening fake accounts using your personal information. So take the time out and close any inactive or dormant accounts!
